Dow rose 328 (but under session high), advancers ahead of decliners 4-3 & NAZ rose 82. The MLP index was off 2+ to the 207s & the REIT index fell fractionally to to 346. Junk bond funds slid lower & Treasuries declined. Oil advanced finishing just under 40 & gold dropped 11 to 1892 (more on both below).
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
More Americans signed contracts to buy homes in Aug, suggesting
the hot US housing market will continue to churn well into fall. The
National Association of Realtors said that its index of
pending sales rose 8.8% to a record high of 132.8. An index of 100
represents the level of contract activity in 2001. It had sunk to a low
of 69 in Apr, when buyers & sellers were sidelined as the
coronavirus swept thru the US. Contract
signings are a barometer of finalized purchases over the next 2
months, so this month's numbers point to continued strong sales into
Oct. The housing market has been one of the highlights of the
US economy, which is still trying to get back its pre-virus momentum.
Contract signings are now 24.2% ahead of where they were last year,
after falling behind last year's pace earlier in the year because of the
pandemic. The positive pending home sales numbers follow a pair of indicators
showing continued strength in the housing market. The National
Association of Realtors said last week that sales of existing homes rose
2.4% in Aug to its highest level since 2006. Sales are up 10.5% from
a year ago & back to pre-COVID-19 levels of early 2020. Also last
week, the Commerce Dept reported that sales of new homes rose a
solid 4.8% in August after surging 13.9% in Jul. Historically
low interest rates of less than 3% are pushing buyers into the market,
even as home prices rise due to lack available properties. The
median price for an existing single-family home reached $315K in
Aug, up 11.7% from last year. The median price of a new home sold
in Aug was $313K. All 4 regions of the US saw more contract signings for the 3rd straight month.
More Americans sign contracts to buy homes in August
Gold futures finished lower in the session, contributing to a
loss for the month as prices responded to a strengthening $
that was been weighing on commodity prices. The bullion, however, tallied an 8th straight quarterly gain, buoyed by haven demand for the precious metal. Dec gold retreated $7 (0.4%) to settle at $1895 an ounce. For
the month, gold lost 4.2%, but advanced 5.2% over the 3-month period
ended in Sep, tracking the
most-active contract. Gold futures had earlier briefly risen to trade back above $1900 shortly after data showed the pace of US private sector job growth in Sep
was the strongest in 3 months. Private-sector employment rose by
749K jobs, Automatic Data Processing reported. The
gov will release its Sep jobs report on Fri. Meanwhile, the record decline in the US economy in Q2 was lowered slightly to a 31.4% annual pace, from a previous reading of 31.7%.
Gold prices fall for the month, but tally an 8th quarterly gain in a row
The record decline in the US economy in the early stages of the
coronavirus pandemic was modified slightly to a 31.4% annual pace —
setting the stage for a big rebound in Q3. The
decline in GDP, the official score card for the US
economy, was previously put at 31.7% during the April-Jun. The economy has been engaged in a comeback since the start of
the summer, & GDP is expected to show a big snap-back rebound Q3. Economists predict the US is
likely to expand at a record 25% annual clip during the
Jul-Sep time frame. Q3 GDP will be released at the
end of Oct. Even a rebound of that size, however, will leave the economy in a
shrunken state compared with before the advent of the coronavirus
pandemic in Mar. Many think a full recovery could take a
few years. GDP is a checkup of sorts for an economy, measuring
consumer spending, business investment, gov outlays & other
contributors to an expansion or a contraction. Previously GDP had never shrunk by more than 10% on an annualized basis
in any qtr since the gov began keeping track after World War
II. Consumer spending, the main engine of the economy, contracted by a
slightly revised 33.2% annual clip in the spring. Business investment in structures & equipment each
sank by a more than 30% rate in the 2nd qtr, both record
declines. The level of inventories fell by a $206B annual rate in Q2, little changed from the prior estimate. Federal
spending jumped by a revised 16.4%. The gov spent Ts to
help households & businesses get thru an economic lockdown that
shuttered many companies & severely depressed growth, putting Ms
out of work. Inflation as measured by the Federal Reserve's
preferred PCE price index declined by a 1.6% annual rate, compared to
prior -1.8% reading. Most other figures in the GDP report were little changed. Q2 is water under the bridge. The just-about-to-end Q3 is in some ways also water under the bridge. It's sure to
turn out to be a strong one because the economy reopened & Ms returned to work. What matters now is how fast the US
grows in the final 3 months of the year, an outcome that could shape
the nature of the recovery in the longer run. While there are
signs growth has slowed, the economy has also proven more resilient than
most forecasters expected. That’s a potentially good omen.
U.S. economy’s historic contraction in second quarter tweaked to 31.4%
Prolonged closures at Disney's (DIS), a Dow stock, theme parks & limited attendance at its open parks
has forced the company to lay off 28K employees across its parks,
experiences & consumer products division. In a memo sent to employees, Josh D’Amaro, head of parks at
DIS, detailed several “difficult decisions” the company has had to
make in the wake of the coronavirus pandemic, including ending its
furlough of thousands of employees. Around 67% of the 28K laid off workers were part-time employees. The company declined to
break down the layoffs by individual park locations. While the theme parks in Florida, Paris, Shanghai, Japan & Hong Kong
have been able to reopen with limited capacity, both California
Adventure & Disneyland have remained shuttered in Anaheim, California. The company has been hemorrhaging money since the outbreak began. In Q2, it reported a loss of $1B in operating
income due to the closures of its parks, hotels & cruise lines. In Q3, the company reported a steeper loss of $3.5B.
The stock was off 1.21.
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club.ino.com/trend/analysis/stock/DIS?a_aid=CD3289&a_bid=6ae5b6f7
Disney to lay off 28,000 employees as coronavirus slams its theme park business
Dallas Fed Pres Robert Kaplan said that it is
likely appropriate to keep interest rates anchored near zero for up to 3 years to aid the US economic recovery from the coronavirus
pandemic. “I think we’re going to need to keep the Fed funds rate
at zero ... for the next probably 2½ to three years years,” Kaplan said. ”
It could be that long that until we get on track, to have weathered the
crisis and are on track to meet our full employment and price stability
goals.” Earlier this month, the Federal Reserve's policymaking committee voted to keep short-term rates targeted at 0%-0.25%, where they have been for for the last 6 months & indicated they would remain there until inflation rises consistently. Kaplan was one of 2 members to vote against the policy
action, but he stressed today it is due to his desire for the
central bank to have more leeway to its monetary approach. “My
dissent is about making commitments beyond that point. I think beyond
that point, I’d rather see us keep some flexibility,” He said, while
noting the Fed's new policy of average inflation targeting is likely to mean lower interest rates even as unemployment rate falls. “I
don’t know if that’s going to be appropriate. Historically, it wouldn’t
have been,” added Kaplan,. “With the new framework and our inflation targets, I
think we’re going to be more accommodative than we have been in the
past, but I don’t know if we want to be committing to keeping rates at
zero until we meet these targets.” To be sure, Kaplan emphasized
he continues to believe in the accommodative stance the central bank has
adopted in response to the pandemic. “Obviously,
we’re doing extraordinary actions, not just the Fed funds rate but also
what we’re doing with the 13(3) programs and asset buying, but we need
to because it’s a crisis,” Kaplan said, referring to the emergency lending enabled under the 13(3) powers of the Federal Reserve Act. However,
Kaplan cautioned there are limits to what the central bank can do for
the US economy, contending more stimulus from Congress to make up for
lost income is necessary.
Dallas Fed’s Kaplan: Near-zero interest rates may be needed for up to 3 years
US oil futures settled higher after US gov data
showed a 3rd consecutive weekly decline in domestic crude supplies. Prices,
however, still suffered their first monthly decline since Apr as
concerns persist about the global economic outlook & its impact on
demand. The Energy Information Administration reported that US crude inventories fell for a 3rd straight week,
down by 2M barrels last week. That compared
with an average climb of 1.9M barrels expected, while the American Petroleum Institute yesterday had reported a fall of 831K barrels. The EIA data showed crude stocks at the Cushing, Okla., storage hub rose by 1.M barrels for the week. West Texas Intermediate crude for Nov rose 93¢ (2.4%) to settle at $40.22 a barrel. Prices based on the front-month contracts saw
monthly fall of 5.6%, but ended 2.4% higher for the qtr after they had posted gains in each of the last 4
months. The Dec Brent crude,
which became the front month at the end of the session, tacked on
74¢ (1.8%) at $42.30 a barrel. Nov Brent crude, which expired at the end of the day's regular trading, edged down 8¢ at $40.95 a barrel. Based on the front months, Brent prices were down 9.6% for the month & posted a quarterly loss of 0.5%.
Oil prices settle higher as U.S. supplies fall a third week
House Speaker Nancy Pelosi & Treasury Secretary Steve Mnuchin failed to strike a coronavirus stimulus deal during a more than 90-minute meeting. The pair will continue discussions as they try to craft an elusive 5th relief package that could pass both chambers of Congress, the California Dem said. Meanwhile, House Dems plan to vote on their $2.T rescue legislation later today — a largely symbolic action as Senate Majority Leader Mitch McConnell has already opposed the plan. The House speaker said she & Mnuchin had an “extensive conversation” & “found areas where we are seeking further clarification.” Entering the talks, Mnuchin said the White House & Dems had found common ground on issues including direct payments, small business loans & airline aid. But reports indicate they still need to resolve disputes over state & local gov aid & liability protections for businesses, among other topics.
Pelosi, Mnuchin fail to reach stimulus deal but will continue talks as House pushes ahead with vote
Soo much for one more stimulus package. Of course, negotiations began with significant challenges. Tomorrow trading will begin with the weekly jobless claims report which will likely be drab.. For what it's worth, there was buying into the close. The Dow finished the month falling 700 & NAZ was down about 600.
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